RESERVE BANK OF INDIAForeign Exchange Department

Central OfficeMumbai - 400 001

RBI/2014-15/5Master Circular No.14/2014-15 July 01, 2014

To,

All Category – I Authorised Dealer Banks

Madam / Sir,

Master Circular on Exports of Goods and Services

Export of Goods and Services from India is allowed in terms of clause (a) of sub-section

(1) and sub-section (3) of Section 7 of the Foreign Exchange Management Act 1999 (42

of 1999), read with Notification No. G.S.R. 381(E) dated May 3, 2000 viz. Foreign

Exchange Management (Current Account) Rules, 2000, as amended from time to time.

2. This Master Circular consolidates the existing instructions on the subject of "Export of

Goods and Services from India" at one place. The list of underlying circulars/notifications

consolidated in this Master Circular is furnished in Appendix.

3. This Master Circular is being updated from time to time as and when the fresh

instructions are issued. The date up to which the Master Circular has been updated is

suitably indicated.

4. This Master Circular may be referred to for general guidance. The Authorised

Persons and the Authorised Dealer Category – I banks may refer to respective circulars/

notifications for detailed information, if so needed.

Yours faithfully,

(C. D. Srinivasan)Chief General Manager

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INDEXPART-1A. IntroductionPART 2B. General guidelines for ExportsB.1 Exemption from DeclarationsB.2 Manner of Receipt and PaymentB.3 Realisation and Repatriation of export proceedsB.4 Foreign Currency AccountB.5 Diamond Dollar Account (DDA)B.6 Exchange Earners’ Foreign Currency (EEFC) AccountB.7 Setting up of Offices Abroad and Acquisition of Immovable Property for Overseas

OfficeB.8 Advance Payments against ExportsB.9 EDF/SDF Approval for Trade Fair/Exhibitions abroadB.10 EDF/SDF approval for Export of Goods for re-importsB.11 Part Drawings /Undrawn BalancesB.12 Consignment ExportsB.13 Opening / Hiring of Ware houses abroadB.14 Direct dispatch of documents by the exporterB.15 Invoicing of Software ExportsB.16 Short Shipments and Shut out ShipmentsB.17 Counter-Trade ArrangementB.18 Export of Goods on Lease, Hire, etc.B.19 Export on Elongated Credit TermsB.20 Export of goods by Special Economic Zones (SEZs)B.21 Project Exports and Service ExportsB.22 Export of CurrencyB.23 ForfaitingB.24 Exports to neighbouring countries by Road, Rail or RiverB.25 Border Trade with MyanmarB.26 Repayment of State CreditsB.27 Counter –Trade Arrangements with RomaniaPART – 3C. Operational Guidelines for AD Category – I banksC.1 Citing of Specific Identification NumbersC.2 EDF/SDF/SOFTEX procedureC.3.1. EDF Form (Erstwhile GR and PP Form)C.3.2. Mid-Sea Trans-Shipment of catch by Deep Sea Fishing VesselsC.4 SDFC.5 SOFTEX FormsC.6 Random verificationC.7 Certification for EEFC CreditsC.8 Consolidation of Air Cargo/ Sea CargoC.9 Delay in submission of shipping documents by exportersC.10 Check-list for Scrutiny of FormsC.11 Return of Documents to Exporters

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C.12 Handing Over Negotiable Copy of Bill of Lading to Master of Vessel/TradeRepresentative

C.13 Export Bills RegisterC.14 Follow-up of Overdue BillsC.15 Reduction in Invoice Value on Account of Prepayment of Usance BillsC.16 Reduction in Invoice Value in other casesC.17 Export ClaimsC.18 Change of buyer/consigneeC.19 Extension of TimeC.20 Write-off of export bills

C.21 Write off in cases of Payment of Claims by ECGC and private insurancecompanies regulated by Insurance Regulatory and Development Authority (IRDA)

C.22 Write-off - Relaxation

C.23 Shipment Lost in Transit

C.24 ‘Netting off’ of export receivables against import payments – Units in Special EconomicZones (SEZs)

C.25 Set-off of export receivables against import payables

C.26 Agency Commission on Exports

C.27 Refund of Export Proceeds

C.28 Exporters' Caution List

PART – 4Annex-1 - Current Account Transaction RulesAnnex-2 – Form EFCAnnex- 3 – Common SOFTEX FormAnnex- 4 – Revised SOFTEX ProcedureAppendix

PART-1

A. Introduction

(i) Export trade is regulated by the Directorate General of Foreign Trade (DGFT) and itsregional offices, functioning under the Ministry of Commerce and Industry, Department ofCommerce, Government of India. Policies and procedures required to be followed forexports from India are announced by the DGFT, from time to time.

(ii) AD Category – I banks may conduct export transactions in conformity with the ForeignTrade Policy in vogue and the Rules framed by the Government of India and theDirections issued by Reserve Bank from time to time. In exercise of the powers conferredby clause (a) of sub-section (1) and sub-section (3) of Section 7 and sub-section (2) ofSection 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the ReserveBank has notified the Foreign Exchange Management (Export of Goods and Services)Regulations, 2000 relating to export of goods and services from India, hereinafter referredto as the ‘Export Regulations’. These Regulations have been notified vide Notification No.FEMA 23/2000-RB dated May 3, 2000, as amended from time to time.

(iii) The Directions contained in this Circular should be read with the Rules notified by theGovernment of India, Ministry of Finance, vide Notification No.G.S.R.381 (E) dated May 3,

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2000, (Annex - 1) as also Regulations notified by Reserve Bank vide its Notification No.FEMA 23/2000-RB dated May 3, 2000, as amended from time to time

(iv) In terms of Regulation 4 of the Foreign Exchange Management (Guarantees)Regulations, 2000, notified vide Notification No. FEMA 8/2000-RB dated May 3, 2000, ADCategory – I banks have been permitted to issue guarantees on behalf of exporter clientson account of exports out of India subject to specified conditions.

(v) There is no restriction on invoicing of export contracts in Indian Rupees in terms of theRules, Regulations, Notifications and Directions framed under the Foreign ExchangeManagement Act 1999. Further, in terms of Para 2.40 of the Foreign Trade Policy(August 27, 2009 - March 31, 2014), “All export contracts and invoices shall bedenominated either in freely convertible currency or in Indian Rupees but export proceedsshall be realised in freely convertible currency. However, export proceeds against specificexports may also be realised in rupees provided it is through a freely convertible Vostroaccount of a non-resident bank situated in any country, other than a member country ofthe ACU or Nepal or Bhutan”. Indian Rupee is not a freely convertible currency, as yet.

(vi) Any reference to the Reserve Bank should first be made to the Regional Office of theForeign Exchange Department situated in the jurisdiction where the applicant personresides, or the firm / company functions, unless otherwise indicated. If, for any particularreason, they desire to deal with a different office of the Foreign Exchange Department,they may approach the Regional Office of its jurisdiction for necessary approval.

(vii) “Financial Year” (April to March) is reckoned as the time base for all transactionspertaining to trade related issues.

PART 2

B. General guidelines for Exports

B.1 Exemption from Declarations

(i) EDF/SDF Exemption

The requirement of declaration of export of goods and software in the prescribed form willnot apply to the cases indicated in Regulation 4 of Notification No. FEMA 23/2000-RBdated May 3, 2000. The exporters shall, however, be liable to realise and repatriate exportproceeds as per FEMA Regulations.

(ii) Grant of EDF/SDF waiver

AD Category – I banks may consider requests for grant of EDF/SDF waiver fromexporters for export of goods free of cost, for export promotion up to 2 per cent of theaverage annual exports of the applicant during the preceding three financial years subjectto a ceiling of Rs.5 lakhs. For status holder exporters, the limit as per the present ForeignTrade Policy is Rs.10 lakhs or 2 per cent of the average annual export realization duringthe preceding three licensing years (April-March), whichever is higher.

(iii) Expo of goods not involving any foreign exchange transaction directly or indirectlyrequires the waiver of EDF/SDF procedure from the Reserve Bank.

B.2 Manner of Receipt and Payment

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(i) The amount representing the full export value of the goods exported shall be receivedthrough an AD Bank in the manner specified in the Foreign Exchange Management(Manner of Receipt & Payment) Regulations, 2000 notified vide Notification No.FEMA.14/2000-RB dated May 3, 2000 in the following manner:

a. Bank draft, pay order, banker's or personal cheques.

b. Foreign currency notes/foreign currency travellers’ cheques from the buyer during hisvisit to India.

c. Payment out of funds held in the FCNR/NRE account maintained by the buyer

d. International Credit Cards of the buyer.

Note: When payment for goods sold to overseas buyers during their visits is received inthis manner, EDF/SDF (duplicate) should be released by the AD Category – I banks onlyon receipt of funds in their Nostro account or if the AD Category – I bank concerned is notthe Credit Card servicing bank, on production of a certificate by the exporter from theCredit Card servicing bank in India to the effect that it has received the equivalent amountin foreign exchange, AD Category – I banks may also receive payment for exports madeout of India by debit to the credit card of an importer where the reimbursement from thecard issuing bank/ organisation will be received in foreign exchange.

(ii) Trade transactions can also be settled in the following manner:

a. All transactions between a person resident in India and a person resident in Nepal orBhutan may be settled in Indian Rupees. However, in case of export of goods to Nepal,where the importer has been permitted by the Nepal Rashtra Bank to make payment infree foreign exchange, such payments shall be routed through the ACU mechanism.

b. In precious metals i.e. Gold / Silver / Platinum by the Gem & Jewellery units in SEZsand EOUs, equivalent to value of jewellery exported on the condition that the sale contractprovides for the same and the approximate value of the precious metals is indicated in therelevant EDF/SDF Forms.

(iii) Processing of export related receipts through Online Payment Gateway ServiceProviders (OPGSPs)

Authorised Dealer Category – I (AD Category – I) banks have been allowed to offer thefacility of repatriation of export related remittances by entering into standing arrangementswith Online Payment Gateway Service Providers (OPGSPs) subject to the followingconditions –

a. The AD Category-I banks offering this facility shall carry out the due diligence of theOPGSP.

b. This facility shall only be available for export of goods and services of value notexceeding USD 10,000 (US Dollar ten thousand).

c. AD Category-I banks providing such facilities shall open a NOSTRO collection accountfor receipt of the export related payments facilitated through such arrangements. Wherethe exporters availing of this facility are required to open notional accounts with theOPGSP, it shall be ensured that no funds are allowed to be retained in such accounts and

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all receipts should be automatically swept and pooled into the NOSTRO collectionaccount opened by the AD Category-I bank.

d. A separate NOSTRO collection account may be maintained for each OPGSP or thebank should be able to delineate the transactions in the NOSTRO account of eachOPGSP.

e. Under this arrangement, the permissible debits to the NOSTRO collection account arefor repatriation of funds representing export proceeds to India for credit to the exporters’account, payment of fee/commission to the OPGSP as per the predetermined rates /frequency/ arrangement; and charge back to the importer where the exporter has failed indischarging his obligations under the sale contract.

f. The balances held in the NOSTRO collection account shall be repatriated and creditedto the respective exporter's account with a bank in India immediately on receipt of theconfirmation from the importer and, in no case, later than seven days from the date ofcredit to the NOSTRO collection account.

g. AD Category -I banks shall satisfy themselves as to the bona-fides of the transactionsand ensure that the purpose codes reported to the Reserve Bank in the online paymentgateways are appropriate.

h. AD Category -I banks shall submit all the relevant information relating to anytransaction under this arrangement to the Reserve Bank, as and when advised to do so.

i. Each NOSTRO collection account should be subject to reconciliation and audit on aquarterly basis.

j. Resolution of all payment related complaints of exporters in India shall remain theresponsibility of the OPGSP concerned.

k. OPGSPs who are already providing such services as per the specific holding-onapprovals issued by the Reserve Bank shall open a liaison office in India within threemonths from November 16, 2010, after duly finalizing their arrangement with the AD-Category-I banks and obtaining approval from the Reserve Bank for this purpose. Inrespect of all new arrangements, the OPGSP shall open a liaison office with the approvalof the Reserve Bank before operationalising the arrangement. AD Category-I banksdesirous of entering into such an arrangement/s should approach the Reserve Bank forobtaining one time permission in this regard and thereafter report the details of each sucharrangement as and when entered into.

(iv) Settlement System under ACU Mechanism

a) In order to facilitate transactions / settlements, effective January 01, 2009, participantsin the Asian Clearing Union will have the option to settle their transactions either in ACUDollar or in ACU Euro. Accordingly, the Asian Monetary Unit (AMU) shall be denominatedas 'ACU Dollar' and 'ACU Euro' which shall be equivalent in value to one US Dollar andone Euro, respectively.

b) Further, AD Category – I banks are allowed to open and maintain ACU Dollar and ACUEuro accounts with their correspondent banks in other participating countries. All eligiblepayments are required to be settled by the concerned banks through these accounts.

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c) Relaxation from ACU Mechanism- Indo-Myanmar Trade - Trade transactions withMyanmar can be settled in any freely convertible currency in addition to the ACUmechanism.

d) In view of the difficulties being experienced by importers/exporters in payments to /receipts from Iran, it has been decided that with effect from December 27, 2010, alleligible current account transactions including trade transactions with Iran should besettled in any permitted currency outside the ACU mechanism, until further notice.

(v) Third party payments for export / import transactions

Taking into account the evolving international trade practices, it has been decided topermit third party payments for export / import transactions can be made subject toconditions as under:

a) Firm irrevocable order backed by a tripartite agreement should be in place. However, itmay not be insisted upon in cases where documentary evidence for circumstancesleading to third party payments / name of the third party being mentioned in theirrevocable order/ invoice has been produced subject to:(i) AD bank should be satisfied with the bona-fides of the transaction and exportdocuments, such as, invoice / FIRC.(ii) AD bank should consider the FATF statements while handling such transaction.

b. Third party payment should be routed through the banking channel only;

c. The exporter should declare the third party remittance in the Export Declaration Formand it would be responsibility of the Exporter to realize and repatriate the export proceedsfrom such third party named in the EDF;

d. It would be responsibility of the Exporter to realize and repatriate the export proceedsfrom such third party named in the EDF;

e. Reporting of outstanding, if any, in the XOS would continue to be shown against thename of the exporter. However, instead of the name of the overseas buyer from where theproceeds have to be realised, the name of the declared third party should appear in theXOS;.f. In case of shipments being made to a country in Group II of Restricted Cover Countries,(e.g. Sudan, Somalia, etc.), payments for the same may be received from an Open CoverCountry; and

g. In case of imports, the Invoice should contain a narration that the related payment hasto be made to the (named) third party, the Bill of Entry should mention the name of theshipper as also the narration that the related payment has to be made to the (named) thirdparty and the importer should comply with the related extant instructions relating toimports including those on advance payment being made for import of goods.

B.3 Realisation and Repatriation of export proceeds

It is obligatory on the part of the exporter to realise and repatriate the full value of goods orsoftware to India within a stipulated period from the date of export, as under:

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(i) Units located in SEZs shall realize and repatriate the full value of goods / software /services, to India within a period of twelve months from the date of export. Any extensionof time beyond the above stipulated period may be granted by Reserve Bank of India, oncase to case basis.

(ii) By Status Holder Exporters as defined in the Foreign Trade Policy : Within a period oftwelve months from the date of export;

(iii) By 100 % Export Oriented Units (EOUs) and units set up under Electronic HardwareTechnology Parks (EHTPs), Software Technology Parks (STPs) and Biotechnology Parks(BTPs) schemes : Within a period of twelve months from the date of export on or afterSeptember 1, 2004;

(iv) Goods exported to a warehouse established outside India: As soon as it is realisedand in any case within fifteen months from the date of shipment of goods; and

(v) In all other cases: With effect from April 01, 2013 this period of realization andrepatriation to India has been brought down to nine months from the date of export, tillSeptember 30, 2013.

B.4 Foreign Currency Account

(i) Participants in international exhibition/trade fair have been granted general permissionvide Regulation 7(7) of the Foreign Exchange Management (Foreign Currency Account bya Person Resident in India) Regulations, 2000 notified vide Notification No. FEMA10/2000-RB dated May 3, 2000 for opening a temporary foreign currency account abroad.Exporters may deposit the foreign exchange obtained by sale of goods at the internationalexhibition/trade fair and operate the account during their stay outside India provided thatthe balance in the account is repatriated to India through normal banking channels withina period of one month from the date of closure of the exhibition/trade fair and full detailsare submitted to the AD Category – I banks concerned.

(ii) Reserve Bank may consider applications in Form EFC (Annex 2) from exportershaving good track record for opening a foreign currency account with banks in India andoutside India subject to certain terms and conditions. Applications for opening the accountwith a branch of an AD Category – I bank in India may be submitted through the branch atwhich the account is to be maintained. If the account is to be maintained abroad theapplication should be made by the exporter giving details of the bank with which theaccount will be maintained.

(iii) An Indian entity can also open, hold and maintain a foreign currency account with abank outside India, in the name of its overseas office/branch, by making remittance for thepurpose of normal business operations of the said office/branch or representative subjectto conditions stipulated in Regulation 7 of Notification No. FEMA 10/2000-RB dated May3, 2000 and as amended from time to time.

(iv) A unit located in a Special Economic Zone (SEZ) may open, hold and maintain aForeign Currency Account with an AD Category – I bank in India subject to conditionsstipulated in Regulation 6 (A) of Notification No. FEMA 10/2000-RB dated May 3, 2000and as amended from time to time.

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(v) A person resident in India being a project / service exporter may open, hold andmaintain foreign currency account with a bank outside or in India, subject to the standardterms and conditions in the Memorandum PEM.

B.5 Diamond Dollar Account (DDA)

(i) Under the scheme of Government of India, firms and companies dealing in purchase /sale of rough or cut and polished diamonds / precious metal jewellery plain, minakari and /or studded with / without diamond and / or other stones, with a track record of at least 2years in import / export of diamonds / coloured gemstones / diamond and colouredgemstones studded jewellery / plain gold jewellery and having an average annual turnoverof Rs. 3 crores or above during the preceding three licensing years (licensing year is fromApril to March) are permitted to transact their business through Diamond Dollar Accounts.

(ii) They may be allowed to open not more than five Diamond Dollar Accounts with theirbanks.

(iii) Eligible firms and companies may apply for permission to their AD Category – I banksin the format prescribed.

(iv) AD Category-I banks are required to submit quarterly reports to the Foreign ExchangeDepartment, Reserve Bank of India, Central Office, Trade Division, Mumbai, giving detailsof name and address of the firm / company in whose name the Diamond Dollar Account isopened, along with the date of opening / closing the Diamond Dollar Account, by the 10thof the month following the quarter to which it relates.

(v) AD Category - I banks are required to submit a statement giving the data on the DDAbalances maintained by them on a fortnightly basis within seven days of close of thefortnight to which it relates, to the Foreign Exchange Department, Reserve Bank of India,Central Office, Trade Division, Mumbai.

(vi) Condition mentioned at Para B.6 (iv) shall also apply.

B.6 Exchange Earners’ Foreign Currency (EEFC) Account

(i) A person resident in India may open with, an AD Category – I bank in India, an accountin foreign currency called the Exchange Earners’ Foreign Currency (EEFC) Account, interms of Regulation 4 of the Foreign Exchange Management (Foreign Currency Accountby a Person Resident in India) Regulations, 2000 notified under Notification No. FEMA10/2000-RB dated May 3, 2000 as amended from time to time.

(ii) Resident individuals are permitted to include resident close relative(s) as defined in theCompanies Act 1956 as a joint holder(s) in their EEFC bank accounts on former orsurvivor basis. However, such resident Indian close relative, being made eligible tobecome joint account holder, shall not be eligible to operate the account during the lifetime of the resident account holder

(iii) This account shall be maintained only in the form of non-interest bearing currentaccount. No credit facilities, either fund-based or non-fund based, shall be permittedagainst the security of balances held in EEFC accounts by the AD Category – I banks.

(iv) All categories of foreign exchange earners are allowed to credit 100% of their foreignexchange earnings to their EEFC Accounts subject to the condition that

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a) The sum total of the accruals in the account during a calendar month should beconverted into Rupees on or before the last day of the succeeding calendar month afteradjusting for utilization of the balances for approved purposes or forward commitments.Further, in case of requirements, EEFC account holders are permitted to access the forexmarket for purchasing foreign exchange.

b) The facility of EEFC scheme is intended to enable exchange earners to save onconversion/transaction costs while undertaking forex transactions. This facility is notintended to enable exchange earners to maintain assets in foreign currency, as India isstill not fully convertible on Capital Account.

(iv) It may be noted that the provisions at paragraph (iv) a) and (iv) b) above will apply,mutatis mutandis, also to holder of either a Resident Foreign Currency Account(Domestic) or a Diamond Dollar Account (DDA).

(v) The eligible credits represent –

a. inward remittance received through normal banking channel, other than the remittancereceived pursuant to any undertaking given to the Reserve Bank or which representsforeign currency loan raised or investment received from outside India or those receivedfor meeting specific obligations by the account holder.

b. Payments received in foreign exchange by a unit in Domestic Tariff Area (DTA) forsupplying goods to a unit in Special Economic Zone out of its foreign currency account.

(vi) AD Category – I banks may permit their exporter constituents to extend trade relatedloans / advances to overseas importers out of their EEFC balances without any ceilingsubject to compliance of provisions of Notification No. FEMA 3/2000-RB dated May 3,2000 as amended from time to time.

(vii) AD Category – I banks may permit exporters to repay packing credit advanceswhether availed in Rupee or in foreign currency from balances in their EEFC account and/ or Rupee resources to the extent exports have actually taken place.

B.7 Setting up of Offices Abroad and Acquisition of Immovable Property forOverseas Offices

(i) At the time of setting up of the office, AD Category – I banks may allow remittancestowards initial expenses up to fifteen per cent of the average annual sales/income orturnover during the last two financial years or up to twenty-five per cent of the net worth,whichever is higher.

(ii) For recurring expenses, remittances up to ten per cent of the average annualsales/income or turnover during the last two financial years may be sent for the purpose ofnormal business operations of the office (trading / non-trading) / branch or representativeoffice outside India subject to the following terms and conditions:

a. The overseas branch/office has been set up or representative is posted overseas forconducting normal business activities of the Indian entity;

b. The overseas branch/office/representative shall not enter into any contract oragreement in contravention of the Act, Rules or Regulations made there under;

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c. The overseas office (trading / non-trading) / branch / representative should not createany financial liabilities, contingent or otherwise, for the head office in India and also notinvest surplus funds abroad without prior approval of the Reserve Bank. Any fundsrendered surplus should be repatriated to India.

(iii) The details of bank accounts opened in the overseas country should be promptlyreported to the AD Bank.

(iv) AD Category – I banks may also allow remittances by a company incorporated in Indiahaving overseas offices, within the above limits for initial and recurring expenses, toacquire immovable property outside India for its business and for residential purpose of itsstaff.

(v) The overseas office / branch of software exporter company/firm may repatriate toIndia 100 per cent of the contract value of each ‘off-site’ contract.

(vi) In case of companies taking up ‘on site’ contracts, they should repatriate the profits ofsuch ‘on site’ contracts after the completion of the said contracts.

(vii) An audited yearly statement showing receipts under ‘off-site’ and ‘on-site’ contractsundertaken by the overseas office, expenses and repatriation thereon may be sent to theAD Category – I banks.

B.8 Advance Payments against Exports

(1) In terms of Regulation 16 of Notification No. FEMA 23/2000-RB dated May 3, 2000,where an exporter receives advance payment (with or without interest), from a buyeroutside India, the exporter shall be under an obligation to ensure that the shipment ofgoods is made within one year from the date of receipt of advance payment; the rate ofinterest, if any, payable on the advance payment does not exceed London Inter-BankOffered Rate (LIBOR) + 100 basis points; and the documents covering the shipment arerouted through the AD Category – I bank through whom the advance payment is received.Provided that in the event of the exporter’s inability to make the shipment, partly or fully,within one year from the date of receipt of advance payment, no remittance towardsrefund of unutilized portion of advance payment or towards payment of interest, shall bemade after the expiry of the said period of one year, without the prior approval of theReserve Bank.

(2) AD Category- I banks can also allow exporters having a minimum of three years’satisfactory track record to receive long term export advance up to a maximum tenor of 10years to be utilized for execution of long term supply contracts for export of goods subjectto the conditions as under:

(i) Firm irrevocable supply orders and contracts should be in place. Product pricing shouldbe in consonance with prevailing international prices.

(ii) Company should have capacity, systems and processes in place to ensure that theorders over the duration of the said tenure can actually be executed.

(iii) The facility is to be provided only to those entities, who have not come under theadverse notice of Enforcement Directorate or any such regulatory agency or have notbeen caution listed.

(iv) Such advances should be adjusted through future exports.

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(v) The rate of interest payable, if any, should not exceed LlBOR plus 200 basis points.

(vi) The documents should be routed through one Authorized Dealer bank only.

(vii) Authorised Dealer bank should ensure compliance with AML / KYC guidelines

(viii) Such export advances shall not be permitted to be used to liquidate Rupee loansclassified as NPA.

(ix) Double financing for working capital for execution of export orders should be avoided.

(x) Receipt of such advance of USD 100 million or more should be immediately reportedto the Trade Division, Foreign Exchange Department, Reserve Bank of India, CentralOffice, Mumbai.

(xi) a. In case Authorized Dealer banks are required to issue bank guarantee (BG) / Standby Letter of Credit (SBLC) for export performance, then the issuance should be rigorouslyevaluated as any other credit proposal keeping in view, among others, prudentialrequirements based on board approved policy.

b. BG / SBLC may be issued for a term not exceeding two years at a time and furtherrollover of not more than two years at a time may be allowed subject to satisfaction withrelative export performance as per the contract.

c. BG / SBLC should cover only the advance on reducing balance basis.

d. BG / SBLC issued from India in favour of overseas buyer should not be discounted bythe overseas branch / subsidiary of bank in India.

(xii) AD Category – I banks may allow the purchase of foreign exchange from the marketfor refunding advance payment credited to EEFC account only after utilizing the entirebalances held in the exporter’s EEFC accounts maintained at different branches/banks.

Note: AD Category – I banks may also be guided by the Master Circular on Guaranteesand Co-acceptances issued by DBOD.

(3) ‘AD Category- I banks may allow exporters to receive advance payment for export ofgoods which would take more than one year to manufacture and ship and where the‘export agreement’ provides for shipment of goods extending beyond the period of oneyear from the date of receipt of advance payment subject to the following conditions:-

(i) The KYC and due diligence exercise has been done by the AD Category –I bank for theoverseas buyer;

(ii) Compliance with the Anti-Money Laundering standards has been ensured;

(iii) The AD Category-I bank should ensure that export advance received by the exportershould be utilized to execute export and not for any other purpose i.e., the transaction is abona-fide transaction;

(iv) Progress payment, if any, should be received directly from the overseas buyer strictlyin terms of the contract;

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(v) The rate of interest, if any, payable on the advance payment shall not exceed LondonInter-Bank Offered Rate (LIBOR) + 100 basis points;

(vi) There should be no instance of refund exceeding 10% of the advance paymentreceived in the last three years;

(vii) The documents covering the shipment should be routed through the same authoriseddealer bank; and

(viii) In the event of the exporter's inability to make the shipment, partly or fully, noremittance towards refund of unutilized portion of advance payment or towards paymentof interest should be made without the prior approval of the Reserve Bank.’

B.9 EDF/SDF Approval for Trade Fair/Exhibitions abroad

1. Firms / Companies and other organizations participating in Trade Fair/Exhibition abroadcan take/export goods for exhibition and sale outside India without the prior approval ofthe Reserve Bank. Unsold exhibit items may be sold outside the exhibition/trade fair in thesame country or in a third country. Such sales at discounted value are also permissible. Itwould also be permissible to `gift’ unsold goods up to the value of USD 5000 per exporter,per exhibition/trade fair. AD Category – I banks may approve EDF/SDF Form of exportitems for display or display-cum-sale in trade fairs/exhibitions outside India subject to thefollowing:

(i) The exporter shall produce relative Bill of Entry within one month of re-import into Indiaof the unsold items.

(ii) The sale proceeds of the items sold are repatriated to India in accordance with theForeign Exchange Management (Realisation, Repatriation, and Surrender of ForeignExchange) Regulations, 2000.

(iii) The exporter shall report to the AD Category – I banks the method of disposal of allitems exported, as well as the repatriation of proceeds to India.

(iv) Such transactions approved by the AD Category – I banks will be subject to 100 percent audit by their internal inspectors/auditors.

B.10 EDF/SDF approval for Export of Goods for re-imports

(i) AD Category – I banks may consider request from exporters for granting EDF/SDFapproval in cases where goods are being exported for re-import after repairs /maintenance / testing / calibration, etc., subject to the condition that the exporter shallproduce relative Bill of Entry within one month of re-import of the exported item from India.

(ii) Where the goods being exported for testing are destroyed during testing, AD Category– I banks may obtain a certificate issued by the testing agency that the goods have beendestroyed during testing, in lieu of Bill of Entry for import.

B.11 Part Drawings /Undrawn Balances

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(i) In certain lines of export trade, it is the practice to leave a small part of the invoice valueundrawn for payment after adjustment due to differences in weight, quality, etc., to beascertained after arrival and inspection, weighment or analysis of the goods. In suchcases, AD Category – I banks may negotiate the bills, provided:

a. The amount of undrawn balance is considered normal in the particular line of exporttrade, subject to a maximum of 10 per cent of the full export value.

b. An undertaking is obtained from the exporter on the duplicate of EDF/SDF forms thathe will surrender/account for the balance proceeds of the shipment within the periodprescribed for realization.

(ii) In cases where the exporter has not been able to arrange for repatriation of theundrawn balance in spite of best efforts, AD Category – I banks, on being satisfied withthe bona fides of the case, should ensure that the exporter has realised at least the valuefor which the bill was initially drawn (excluding undrawn balances) or 90 per cent of thevalue declared on EDF/SDF form, whichever is more and a period of one year haselapsed from the date of shipment.

B.12 Consignment Exports

(i) When goods have been exported on consignment basis, the AD Category-I bank, whileforwarding shipping documents to his overseas branch/ correspondent, should instruct thelatter to deliver them only against trust receipt/undertaking to deliver sale proceeds by aspecified date within the period prescribed for realization of proceeds of the export. Thisprocedure should be followed even if, according to the practice in certain trades, a bill forpart of the estimated value is drawn in advance against the exports.

(ii) The agents/consignees may deduct from sale proceeds of the goods expensesnormally incurred towards receipt, storage and sale of the goods, such as landingcharges, warehouse rent, handling charges, etc. and remit the net proceeds to theexporter.

(iii) The account sales received from the Agent/Consignee should be verified by the ADCategory – I banks. Deductions in Account Sales should be supported by bills/receipts inoriginal except in case of petty items like postage/cable charges, stamp duty, etc.

(iv) In case the goods are exported on consignment basis, freight and marine insurancemust be arranged in India.

(v) AD Category – I banks may allow the exporters to abandon the books, which remainunsold at the expiry of the period of the sale contract. Accordingly, the exporters mayshow the value of the unsold books as deduction from the export proceeds in the AccountSales.

B.13 Opening / Hiring of Ware houses abroad

AD Category – I banks may consider the applications received from exporters and grantpermission for opening / hiring warehouses abroad subject to the following conditions:

(i) Applicant’s export outstanding does not exceed 5 per cent of exports made during theprevious financial year.

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(ii) Applicant has a minimum export turnover of USD 100,000/- during the last financialyear.

(iii) Period of realisation should be as applicable.

(iv) All transactions should be routed through the designated branch of the AD Banks.

(v) The above permission may be granted to the exporters initially for a period of one yearand renewal may be considered subject to the applicant satisfying the requirement above.

(vi) AD Category – I banks granting such permission/approvals should maintain a properrecord of the approvals granted.

B.14 Direct dispatch of documents by the exporter

1. AD Category – I banks should normally dispatch shipping documents to their overseasbranches/correspondents expeditiously. However, they may dispatch shipping documentsdirect to the consignees or their agents resident in the country of final destination of goodsin cases where:

(i) Advance payment or an irrevocable letter of credit has been received for the full valueof the export shipment and the underlying sale contract/letter of credit provides fordispatch of documents direct to the consignee or his agent resident in the country of finaldestination of goods.

(ii) The AD Category – I banks may also accede to the request of the exporter providedthe exporter is a regular customer and the AD Category – I bank is satisfied, on the basisof standing and track record of the exporter and arrangements have been made forrealisation of export proceeds.

2. AD Category – I banks may also permit `Status Holder Exporters’ (as defined in theForeign Trade Policy), and units in Special Economic Zones (SEZ) to dispatch the exportdocuments to the consignees outside India subject to the terms and conditions that:

(i) The export proceeds are repatriated through the AD banks named in the EDF/SDFForm.

(ii) The duplicate copy of the EDF/SDF form is submitted to the AD banks for monitoringpurposes, by the exporters within 21 days from the date of shipment of export.

3. AD Category – I banks may regularize cases of dispatch of shipping documents by theexporter direct to the consignee or his agent resident in the country of the final destinationof goods, up to USD 1 million or its equivalent, per export shipment, subject to thefollowing conditions:

(i) The export proceeds have been realised in full.(ii) The exporter is a regular customer of AD Category – I bank for a period of at least sixmonths.

(iii) The exporter’s account with the AD Category – I bank is fully compliant with theReserve Bank’s extant KYC / AML guidelines.

(iv) The AD Category – I bank is satisfied about the bona-fides of the transaction.

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(v) In case of doubt, the AD Category – I bank may consider filing Suspicious TransactionReport (STR) with FIU_IND (Financial Intelligence Unit in India).

B.15 Invoicing of Software Exports

(i) For long duration contracts involving series of transmissions, the exporters should billtheir overseas clients periodically, i.e., at least once a month or on reaching the‘milestone’ as provided in the contract entered into with the overseas client and the lastinvoice / bill should be raised not later than 15 days from the date of completion of thecontract. It would be in order for the exporters to submit a combined SOFTEX form for allthe invoices raised on a particular overseas client, including advance remittances receivedin a month.

(ii) Contracts involving only ‘one-shot operation’, the invoice/bill should be raised within 15days from the date of transmission.

(iii) The exporter should submit declaration in Form SOFTEX in quadruplicate in respect ofexport of computer software and audio / video / television software to the designatedofficial concerned of the Government of India at STPI / EPZ /FTZ /SEZ for valuation /certification not later than 30 days from the date of invoice / the date of last invoice raisedin a month, as indicated above. The designated officials may also certify the SOFTEXForms of EOUs, which are registered with them.

(iv) The invoices raised on overseas clients as at (i) and (ii) above will be subject tovaluation of export declared on SOFTEX form by the designated official concerned of theGovernment of India and consequent amendment made in the invoice value, if necessary.

B.16 Short Shipments and Shut out Shipments

(i) When part of a shipment covered by a EDF/SDF form already filed with Customs isshort-shipped, the exporter must give notice of short-shipment to the Customs in the formand manner prescribed. In case of delay in obtaining certified short-shipment notice fromthe Customs, the exporter should give an undertaking to the AD banks to the effect thathe has filed the short-shipment notice with the Customs and that he will furnish it as soonas it is obtained.

(ii) Where a shipment has been entirely shut out and there is delay in makingarrangements to re-ship, the exporter will give notice in duplicate to the Customs in theform and manner prescribed, attaching thereto the unused duplicate copy of EDF/SDFform and the shipping bill. The Customs will verify that the shipment was actually shut out,certify the copy of the notice as correct and forward it to the Reserve Bank together withunused duplicate copy of the EDF/SDF form. In this case, the original EDF/SDF formreceived earlier from Customs will be cancelled. If the shipment is made subsequently, afresh set of EDF/SDF form should be completed

B.17 Counter-Trade Arrangement

Counter trade proposals involving adjustment of value of goods imported into Indiaagainst value of goods exported from India in terms of an arrangement voluntarily enteredinto between the Indian party and the overseas party through an Escrow Account openedin India in US Dollar will be considered by the Reserve Bank subject to followingconditions :

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(i) All imports and exports under the arrangement should be at international prices inconformity with the Foreign Trade Policy and Foreign Exchange Management Act, 1999and the Rules and Regulations made there under.

(ii) No interest will be payable on balances standing to the credit of the Escrow Accountbut the funds temporarily rendered surplus may be held in a short-term deposit up to atotal period of three months in a year (i.e., in a block of 12 months) and the banks maypay interest at the applicable rate.

(iii) No fund based/or non-fund based facilities would be permitted against the balances inthe Escrow Account.

(iv) Application for permission for opening an Escrow Account may be made by theoverseas exporter / organisation through his / their AD Category – I bank to the RegionalOffice concerned of the Reserve Bank.

B.18 Export of Goods on Lease, Hire, etc.

Prior approval of the Reserve Bank is required for export of machinery, equipment, etc.,on lease, hire basis under agreement with the overseas lessee against collection of leaserentals/hire charges and ultimate re-import. Exporters should apply for necessarypermission, through an AD Category – I banks, to the Regional Office concerned of theReserve Bank, giving full particulars of the goods to be exported.

B.19 Export on Elongated Credit Terms

Exporters intending to export goods on elongated credit terms may submit their proposalsgiving full particulars through their banks for consideration to the Regional Officeconcerned of the Reserve Bank.

B.20 Export of goods by Special Economic Zones (SEZs)

(i) Units in SEZs are permitted to undertake job work abroad and export goods from thatcountry itself subject to the conditions that:

a. Processing / manufacturing charges are suitably loaded in the export price and areborne by the ultimate buyer.b. The exporter has made satisfactory arrangements for realisation of full export proceedssubject to the usual EDF/SDF procedure.

AD Category – I banks may permit units in DTAs to purchase foreign exchange for makingpayment for goods supplied to them by units in SEZs.

(ii) Export of Services by Special Economic Zones (SEZs) to DTA Unit. Authorised DealerBanks are permitted to sell foreign exchange to a unit in the DTA for making payment inforeign exchange to a unit in the SEZ for the services rendered by it (i.e. a unit in SEZ) toa DTA unit. It must be ensured that in the Letter of Approval (LoA) issued to the SEZ unitby the Development Commissioner(DC) of the SEZ, the provisions pertaining to the goods/ services supplied by the SEZ unit to the DTA unit and for payment in foreign exchangefor the same should be mentioned.

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B.21 Project Exports and Service Exports

(i) Export of engineering goods on deferred payment terms and execution of turnkeyprojects and civil construction contracts abroad are collectively referred to as ‘ProjectExports’. Indian exporters offering deferred payment terms to overseas buyers and thoseparticipating in global tenders for undertaking turnkey/civil construction contracts abroadare required to obtain the approval of the AD Category – I banks/ EXIM Bank/ WorkingGroup at post-award stage before undertaking execution of such contracts. Regulationsrelating to ‘ Project Exports’ and ‘Service Exports’ are laid down in the revisedMemorandum of Instructions on Project and Service Exports (PEM- October 2003 asamended from time to time).

(ii) In order to provide greater flexibility to project exporters and exporters of services inconducting their overseas transactions, the guidelines stipulated vide paragraphs B.10 (i)(f),C 1(ii), D.1 (i), D.3 and D.4(iv) of the PEM have been modified. Project/Serviceexporters have also been extended the facility of deployment of temporary cash balanceas set out here under;

(a) Inter-Project Transfer of Machinery [B 10 (i) (f) & D 4 (iv)]

The stipulation regarding recovery of market value (not less than book value) of themachinery, etc., from the transferee project has been withdrawn. Further, exporters mayuse the machinery / equipment for performing any other contract secured by them in anycountry subject to the satisfaction of the sponsoring AD Category – I bank(s) / EXIM Bank/ Working Group and also subject to the reporting requirement and would be monitored bythe AD Category – I bank(s) / EXIM Bank / Working Group.

(b) Inter-Project Transfer of Funds [D 1 (i) & D 3]

AD Category – I bank(s) / EXIM Bank / Working Group may permit exporters to open,maintain and operate one or more foreign currency account/s in a currency(ies) of theirchoice with inter-project transferability of funds in any currency or country. The Inter-project transfer of funds will be monitored by the AD Category – I bank(s) / EXIM Bank /Working Group.

(c) Deployment of Temporary Cash Surpluses

Subject to monitoring by the AD Category – I bank(s) / EXIM Bank / Working Group,Project / Service exporters may deploy their temporary cash surpluses, generated outsideIndia investments in short-term paper abroad including treasury bills and other monetaryinstruments with a maturity or remaining maturity of one year or less and the rating ofwhich should be at least A-1/AAA by Standard & Poor or P-1/Aaa by Moody’s or F1/AAAby Fitch IBCA etc., ,and as deposits with branches / subsidiaries outside India of ADCategory – I banks in India.

(d) Repatriation of Funds in case of On-site Software Contracts [C 1 (ii)]

The requirement of repatriation of 30 per cent of contract value in respect of on-sitecontracts by software exporter company / firm has been dispensed with. They should,however, repatriate the profits of on-site contracts after completion of the contracts as perpara B.7 (vii), ibid.

B.22 Export of Currency

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In terms of Foreign Exchange Management (Export and Import of Currency) Regulations,2000 notified vide Notification No. FEMA 6/ 2000-RB dated 3rd May 2000, as amendedfrom time to time, permission of Reserve Bank is required for any export of Indiancurrency except to the extent permitted under any general permission granted under theRegulations as under:(i) Any person resident in India may take outside India (other than to Nepal and Bhutan)currency notes of Government of India and Reserve Bank of India notes up to an amountnot exceeding Rs.25,000 (Rupees twenty five thousand only); and(ii) Any person resident outside India, not being a citizen of Pakistan and Bangladesh andalso not a traveller coming from and going to Pakistan and Bangladesh, and visiting Indiamay take outside India currency notes of Government of India and Reserve Bank of Indianotes up to an amount not exceeding Rs. 25,000 (Rupees twenty five thousand only)while exiting only through an airport.

B.23 Forfaiting

Export-Import Bank of India (EXIM Bank) and AD Category – I banks have been permittedto undertake forfaiting, for financing of export receivables. Remittance of commitment fee /service charges, etc., payable by the exporter as approved by the EXIM Bank / ADCategory – I banks concerned may be done through an AD bank. Such remittances maybe made in advance in one lump sum or at monthly intervals as approved by the authorityconcerned.

B.24 Exports to neighbouring countries by Road, Rail or River

The following procedure should be adopted by exporters for filing original copies ofEDF/SDF forms where exports are made to neighbouring countries by road, rail or rivertransport:

(i) In case of exports by barges/country craft/road transport, the form should be presentedby exporter or his agent at the Customs station at the border through which the vessel orvehicle has to pass before crossing over to the foreign territory. For this purpose, exportermay arrange either to give the form to the person in charge of the vessel or vehicle orforward it to his agent at the border for submission to Customs.

(ii) As regards exports by rail, Customs staff has been posted at certain designatedrailway stations for attending to Customs formalities. They will collect the EDF/SDF formsfor goods loaded at these stations so that the goods may move straight on to the foreigncountry without further formalities at the border. The list of designated railway stations canbe obtained from the Railways. For goods loaded at stations other than the designatedstations, exporters must arrange to present EDF/SDF forms to the Customs Officer at theBorder Land Customs Station where Customs formalities are completed.

B.25 Border Trade with Myanmar

This is governed by the Agreement on Border Trade between India and Myanmar. Peopleliving along both sides of the India-Myanmar border are permitted to exchange certainspecified locally produced commodities (Annex 5) under the barter trade arrangement.They can also trade in freely convertible currency. AD banks should follow the guidelinesstipulated in A.P.(DIR Series) Circular No.17 dated October 16, 2000.

B.26 Repayment of State Credits

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Export of goods and services against repayment of state credits granted by erstwhileUSSR will continue to be governed by the extant directions issued by the Reserve Bank,as amended from time to time.

B.27 Counter –Trade Arrangements with Romania

The Reserve Bank will consider counter trade proposals from Indian exporters withRomania involving adjustment of value of exports from India against value of importsmade into India in terms of a voluntarily entered arrangement between the concernedparties, subject to the condition, among others that the Indian exporter should utilize thefunds for import of goods from Romania into India within six months from the date of creditto Escrow Accounts allowed to be opened.

PART – 3

C. Operational Guidelines for AD Category – I banks

C.1 Citing of Specific Identification Numbers

(i) In all applications / correspondence with the Reserve Bank, the specific identificationnumber as available on the EDF/SDF and SOFTEX forms should invariably be cited.

(ii) In the case of declarations made on SDF form, the port code number and shipping billnumber should be cited.

C.2 EDF/SDF/SOFTEX procedure

In terms of Regulation 6 of Foreign Exchange Management (Export of Goods andServices) Regulations, 2000 notified vide Notification No. FEMA.23/2000-RB dated 3rdMay 2000, as amended from time to time export declaration forms should be disposed ofas under:

C.3.1. EDF Form (Erstwhile GR and PP Form)

(i) The EDF will replace the existing GR form used for declaration of export of Goods atNon-EDI ports. The procedure relating to the exports of goods through EDI ports willremain the same and SDF form will be applicable as hitherto.

(ii) EDF forms should be completed by the exporter in duplicate and both the copiessubmitted to the Customs at the port of shipment along with the shipping bill.

(iii) Customs will give their running serial number on both the copies after admitting thecorresponding shipping bill. The Customs serial number will have ten numerals denotingthe code number of the port of shipment, the calendar year and a six- digit running serialnumber.

(iv) Customs will certify the value declared by the exporter on both the copies of the EDFform at the space earmarked and will also record the assessed value.

(v) They will then return the duplicate copy of the form to the exporter and retain theoriginal for transmission to the Reserve Bank.

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(vi) Exporters should submit the duplicate copy of the EDF form again to Customs alongwith the cargo to be shipped.

(vii) After examination of the goods and certifying the quantity passed for shipment on theduplicate copy, Customs will return it to the exporter for submission to the AD Category – Ibanks for negotiation or collection of export bills.

(viii) Within 21 days from the date of export, exporter should lodge the duplicate copytogether with relative shipping documents and an extra copy of the invoice with the ADCategory – I banks named in the EDF form.

(ix) After the documents have been negotiated / sent for collection, the AD Category – Ibanks should report the transaction to the Reserve Bank in statement ENC under cover ofappropriate R-Supplementary Return.

(x) The duplicate copy of the form together with a copy of invoice etc. shall be retained bythe AD Category – I banks and may not be submitted to the Reserve Bank.

(xi) In the case of exports made under deferred credit arrangement or to joint venturesabroad against equity participation or under rupee credit agreement, the number and dateof the Reserve Bank approval and/or number and date of the relative RBI circular shouldbe recorded at the appropriate place on the EDF form.

(xii) Where Duplicate copy of EDF form is misplaced or lost, AD Category – I banks mayaccept another copy of duplicate EDF form duly certified by Customs.

Note: EDF Form numbers are now made available on-line on the Reserve Bank’s websitewww.rbi.org.in.

(Link :- Notification → FEMA → Forms → Foreign Exchange Management Act Forms →For Printing of EDF/Softex From No)

(Erstwhile PP Form)

(xiii) Postal Authorities will allow export of goods by post only if the original copy of theform has been countersigned by an AD Category – I bank. Therefore, EDF forms whichinvolve sending goods by post should be first presented by the exporter to an ADCategory – I bank for countersignature. The procedure is as under:

(a) The AD Category – I banks will countersign the forms after ensuring that the parcel isbeing addressed to their branch or correspondent bank in the country of import and returnthe original copy to the exporter, who should submit the form to the post office with theparcel.

(b) The duplicate copy of the EDF form will be retained by the AD banks to whom theexporter should submit relevant documents together with an extra copy of invoice fornegotiation/collection, within the prescribed period of 21 days.

(c) The concerned overseas branch or correspondent should be instructed to deliver theparcel to consignee against payment or acceptance of relative bill.

(d) AD Category – I banks may, however, countersign EDF forms covering parcelsaddressed direct to the consignees, provided:

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(e) An irrevocable letter of credit for the full value of the export has been opened in favourof the exporter and has been advised through the AD Category – I banks concerned.

OrThe full value of the shipment has been received in advance by the exporter through anAD Category – I banks.

OrThe AD Category – I bank is satisfied, on the basis of the standing and track record of theexporter and the arrangements made for realization of the export proceeds, that he coulddo so.(f) In such cases, particulars of advance payment/letter of credit / AD Category – I bank’scertification of standing, etc., of the exporter should be furnished on the form under properauthentication.

(g) Any alteration in the name and address of consignee on the EDF form should also beauthenticated by the AD Category – I banks under his stamp and signature.

C.3.2. Mid-Sea Trans-shipment of catch by Deep Sea Fishing Vessels

(i) Since deep sea fishing involves continuous sailing outside the territorial limit, trans-shipment of catches takes place in the high sea leading to procedural constraints inregulatory reporting requirement viz. the Declaration of Export in terms of NotificationNo.FEMA.23/2000/RB dated May 3, 2000.

(ii) For mid-sea trans-shipment of catches by Indian owned vessels, as per the normsprescribed by the Ministry of agriculture, Government of India, the EDF/SDF declarationprocedure in this regard has been rationalized in consultation with the Government ofIndia as outlined below should be followed by the exporter in conformity with Regulation 3of Notification No.FEMA.23/2000-RB dated May 3, 2000.

(a) The exporters may submit the EDF/SDF form, duly signed by the Master of the Vesselin lieu of Custom Certification, indicating the composition of the catch, quantity, exportvalue, date of transfer of catch, etc.

(b) The date of transfer of catch may be indicated in the column for ‘Date of Shipment’with suitable remarks.

(c) In SDF form, Bill of Lading No. and date shall be mentioned in lieu of the Shipping BillNo. and date.

(d) Bill of Lading / Receipt of Trans-shipment issued by the carrier vessel should includethe EDF/SDF Form Number.

(e) The EDF/SDF Forms should be duly supported by a certificate from an internationalcargo surveyor.

(f) The prescribed period of realization and repatriation should be reckoned withreference to the date of transfer of catch as certified by the Master of the Vessel or thedate of the invoice, whichever is earlier.

(g) The EDF/SDF Form, both original and duplicate, should indicate the number and dateof Letter of Permit issued by Ministry of Agriculture for operation of the vessel.

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(h) The exporter will complete the EDF/SDF Form in duplicate and both the copies maybe submitted to the Customs at the registered port of the vessel or any other port asapproved by Ministry of Agriculture. EDF/SDF (Original) will be retained by the Customsfor capturing of data in Customs’ Electronic Data Interchange.

(i) Customs will give their running serial number on both the copies of EDF/SDF Formand will return the duplicate copy to the exporter as the value certification of the exporthas already been done as mentioned above.

(j) Rules, Regulations and Directions issued in respect of the procedure for submission ofthe EDF/SDF form by exporter to the AD Category-I banks, and the disposal of theseforms by these banks will be same as applicable to the other exporters.

C.4 SDF

The following system may be followed in case of SDF:

(i) The SDF should be submitted in duplicate (to be annexed to the relative shipping bill) tothe Commissioner of Customs concerned.

(ii) After verifying and authenticating the declaration in SDF, the Commissioner ofCustoms will hand over to the exporter, one copy of the shipping bill marked ‘ExchangeControl Copy’ to which form SDF has been appended for being submitted to the ADCategory – I banks within 21 days from the date of export.

(iii) The AD Category – I banks should accept the Exchange Control (EC) copy of theshipping bill and SDF appended thereto, submitted by the exporter forcollection/negotiation of shipping documents.

(iv) The manner of disposal of EC copy of Shipping Bill (and form SDF appended thereto)is the same as that for EDF/SDF forms. The duplicate copy of the form together with acopy of invoice etc. shall be retained by the AD Category – I banks and may not besubmitted to the Reserve Bank.

(v) In cases where ECGC and private insurance companies regulated by InsuranceRegulatory and Development Authority (IRDA) initially settles the claims of exporters inrespect of exports insured with them and subsequently receives the export proceeds fromthe buyer/buyer’s country through the efforts made by them, the share of exporters in theamount so received is disbursed through the bank which had handled the shippingdocuments. In such cases, ECGC and private insurance companies regulated by IRDAwill issue a certificate to the bank, which had handled the relevant shipping documentsafter full proceeds have been received. The certificate will indicate the number ofdeclaration form, name of the exporter, name of the AD Category – I banks, date ofnegotiation, bill number, invoice value and the amount actually received by ECGC andprivate insurance companies regulated by IRDA.

C.5 SOFTEX Forms

(i) A software exporter, whose annual turnover is at least Rs. 1000 crore or who files atleast 600 SOFTEX forms annually, will be eligible to submit a statement in excel format asper Annexure A, giving all particulars along with quadruplicate set of SOFTEX form to thenearest STPI. STPI will then verify the details and decide on a percentage sample check

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of the documents in details. Software companies will submit all the documents on demandto STPI within 30 days of their advice or any reasonable/extended time at the discretion ofthe Director, STPI, at the request from the exporter. STPI will thus certify the statementand SOFTEX forms in bulk on the “Top Sheet” regarding the values etc. and will thereafterforward the first copy of the revised SOFTEX format to the concerned Regional Office ofRBI, the duplicate copy along with bulk statement in excel format to Authorised Dealersfor negotiation / collection / settlement, the third copy to the exporter and the last copy willbe retained by STPI for its own record. Under the revised procedure, the exporters,however, will have to provide information about all the invoices including the ones lesserthan US$25000, in the bulk statement in excel format. [The revised procedure forsubmission of the SOFTEX form and other relevant documents are detailed in the Annex4]

The procedure has been effective at all STPIs and SEZs / EPZs / 100%EOU / DTA since1.1.2013.

(ii) A common “SOFTEX Form” (Annex 3) has been devised to declare single as well asbulk software exports.

(iii) Reserve Bank of India has extended the facility for online generation of the EDF FormNumber and the SOFTEX Form Number (Single as well as Bulk for use in off-site softwareexports). The facility of manual allotment of single as well bulk SOFTEX form number byRegional Offices of RBI has been dispensed with accordingly.

C.6 Random verification

(iv) In all the above procedures, AD Category – I bank should ensure, by random check ofthe relevant duplicate forms by their internal / concurrent auditors, that non-realization orshort realization allowed, if any, is within the powers delegated to them or has been dulyapproved by the Reserve Bank, wherever necessary.

C.7 Certification for EEFC Credits

Where a part of the export proceeds are credited to an EEFC account, the exportdeclaration (duplicate) form may be certified as under:

“Proceeds amounting to …… representing ….. percent of the export realisation credited tothe EEFC account maintained by the exporter with……”

C.8 Consolidation of Air Cargo/Sea Cargo

(i) Consolidation of Air Cargo

(a) Where air cargo is shipped under consolidation, the airline company’s Master AirwayBill will be issued to the Consolidating Cargo Agent. The Cargo agent in turn will issue hisown House Airway Bills (HAWBs) to individual shippers.

(b) AD Category – I banks may negotiate HAWBs only if the relative letter of creditspecifically provides for negotiation of these documents in lieu of Airway Bills issued bythe airline company.

(ii) Consolidation of Sea Cargo

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(a) AD Category – I banks may accept Forwarder’s Cargo Receipts (FCR) issued by IATAapproved agents, in lieu of bills of lading, for negotiation / collection of shippingdocuments, in respect of export transactions backed by letters of credit, if the relativeletter of credit specifically provides for negotiation of this document, in lieu of bill of ladingeven if the relative sale contract with the overseas buyer does not provide for acceptanceof FCR as a shipping document, in lieu of bill of lading

(b) Further, Authorized Dealers may, at their discretion, also accept FCR issued byShipping companies of repute/IATA approved agents (in lieu of bill of lading), forpurchase/discount/collection of shipping documents even in cases, where exporttransactions are not backed by letters of credit, provided their 'relative sale contract' withoverseas buyer provides for acceptance of FCR as a shipping document in lieu of bill oflading. However, the acceptance of such FCR for purchase/discount would purely be thecredit decision of the bank concerned who, among others, should satisfy itself about thebona fides of the transaction and the track record of the overseas buyer and the Indiansupplier since FCRs are not negotiable documents. It would be advisable for the exportersto ensure due diligence on the overseas buyer, in such cases.

C.9 Delay in submission of shipping documents by exporters

In cases where exporters present documents pertaining to exports after theprescribed period of 21 days from date of export, AD Category – I banks may handle themwithout prior approval of the Reserve Bank, provided they are satisfied with the reasonsfor the delay.

C.10 Check-list for Scrutiny of Forms

AD Category – I banks may ensure:

(i) The number on the duplicate copy of the EDF/SDF form presented to them is the sameas that of the original which is usually recorded on the Bill of Lading/Shipping Bill and theduplicate has been duly verified and authenticated by appropriate Customs authorities.

(ii) The Shipping Bill No. on the SDF form should be the same as that appearing on theBill of Lading.

(iii) In the case of c.i.f., c.& f. etc. contracts where the freight is sought to be paid atdestination, that the deduction made is only to the extent of freight declared on EDF/SDFform or the actual amount of freight indicated on the Bill of Lading/Airway Bill, whichever isless.

(iv) The documents submitted do not reveal any material inter se discrepancies in regardto description of goods exported; export value or country of destination.

(v) Where the marine insurance is taken by the exporters on buyer’s account to verify, thatthe actual amount paid is received from the buyer through invoice and the bill.

(vi) To accept the Bill of Lading/Airway Bill issued on ‘freight prepaid’ basis where the salecontract is on f.o.b., f.a.s. etc. basis provided the amount of freight has been included inthe invoice and the bill.

(vii) To negotiate the documents, in cases where the documents are being negotiated by aperson other than the exporter who has signed EDF/SDF//SOFTEX Form for the export

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consignment concerned, after ensuring compliance with Regulation 12 of ForeignExchange Management (Export of Goods and Services) Regulations, 2000.

(viii) To accept the variations in the value declared to the customs authorities and that isreflected on the export documents which stem from the terms of contract, on production ofdocumentary evidence after verifying the arithmetical accuracy of the calculations and onconforming the terms of underlying contracts. Some such instances (where the valuesdeclared to the customs authorities and that shown on the documents may differ) areenumerated hereunder:

(ix) The export realizable value may be more than what was originally declaredto/accepted by the Customs on the EDF/SDF form in certain circumstances such aswhere in c.i.f. or c. & f. contracts, part or whole of any freight increase taking place afterthe contract was concluded is agreed to be borne by buyers or where as a result ofsubsequent devaluation of the currency of the contract, buyers have agreed to anincrease in price.

(x) In certain lines of export trade, the final settlement of price may be dependent on theresults of quality analysis of samples drawn at the time of shipment; but the results ofsuch analysis will become available only after the shipment has been made. Sometimes,contracts may provide for payment of penalty for late shipment of goods in conformity withtrade practice concerning the commodity. In these cases, while exporters declare to theCustoms the full export value based on the contract price, invoices submitted along withshipping documents for negotiation/ collection may reflect a different value arrived at aftertaking into account the results of analysis of samples or late shipment penalty, as the casemay be.

(xi) To accept for negotiation or collection the bills for exports by sea or air which fall shortof the value declared on EDF/SDF forms on account of trade, only if the discount hasbeen declared by the exporter on relative EDF/SDF form at the time of shipment andaccepted by Customs.

C.11 Return of Documents to Exporters

The duplicate copies of EDF/SDF forms and shipping documents, once submitted to theAD Category – I banks for negotiation, collection, etc., should not ordinarily be returned toexporters, except for rectification of errors and resubmission.

C.12 Handing Over Negotiable Copy of Bill of Lading to Master of Vessel/TradeRepresentative

AD Category – I banks may deliver one negotiable copy of the Bill of Lading to the Masterof the carrying vessel or trade representative for exports to certain landlocked countries ifthe shipment is covered by an irrevocable letter of credit and the documents conformstrictly to the terms of the Letter of Credit which, inter alia, provides for such delivery.

C.13 Export Bills Register

(i) AD Category – I banks should maintain Export Bills Register, in physical or electronicform. Details of EDF/SDF/SOFTEX form number, due date of payment, the fortnightlyperiod of R Supplementary Return with which the ENC statement covering the transactionwas sent to the Reserve Bank, should be available.

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(ii) AD Category – I banks should ensure that all types of export transactions are enteredin the Export Bills Register and are given bill numbers on a financial year basis (i.e. Aprilto March).

(iii) The bill numbers should be recorded in ENC statement and other relevant returnssubmitted to the Reserve Bank.

C.14 Follow-up of Overdue Bills

(i) AD Category – I banks should closely watch realization of bills and in cases where billsremain outstanding, beyond the due date for payment from the date of export, the mattershould be promptly taken up with the concerned exporter. If the exporter fails to arrangefor delivery of the proceeds within the stipulated period or seek extension of time beyondthe stipulated period, the matter should be reported to the Regional Office concerned ofthe Reserve Bank stating, where possible, the reason for the delay in realizing theproceeds.

(ii) The duplicate copies of EDF / SDF / SOFTEX Forms should, continue to be held byAD Category – I banks until the full proceeds are realised, except in case of undrawnbalances.

(iii) AD Category – I banks should follow up export outstanding with exporterssystematically and vigorously so that action against defaulting exporters does not getdelayed. Any laxity in the follow up of realization of export proceeds by AD Category – Ibanks will be viewed seriously by the Reserve Bank, leading to the invocation of the penalprovision under FEMA, 1999.

(iv) With effect from the half year ending December 2013, half yearly XOS submissionshould be made online and Bank-wide instead of the present system of branch-wisesubmission through the respective Regional Offices of Reserve Bank of India

C.15 Reduction in Invoice Value on Account of Prepayment of Usance Bills

Occasionally, exporters may approach AD Category – I banks for reduction in invoicevalue on account of cash discount to overseas buyers for prepayment of the usance bills.AD Category – I banks may allow cash discount to the extent of amount of proportionateinterest on the unexpired period of usance, calculated at the rate of interest stipulated inthe export contract or at the prime rate/LIBOR of the currency of invoice where rate ofinterest is not stipulated in the contract.

C.16 Reduction in Invoice Value in other cases

(i) If, after a bill has been negotiated or sent for collection, its amount is to be reduced forany reason, AD Category – I banks may approve such reduction, if satisfied aboutgenuineness of the request, provided:

(a) The reduction does not exceed 25 per cent of invoice value:

(b) It does not relate to export of commodities subject to floor price stipulationsThe exporter is not on the exporters’ caution list of the Reserve Bank, and

(c) The exporter is advised to surrender proportionate export incentives availed of, if any.

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(ii) In the case of exporters who have been in the export business for more than threeyears, reduction in invoice value may be allowed, without any percentage ceiling, subjectto the above conditions as also subject to their track record being satisfactory, i.e., theexport outstanding do not exceed 5 per cent of the average annual export realizationduring the preceding three financial years.

(iii) For the purpose of reckoning the percentage of export bills outstanding to the averageexport realizations during the preceding three financial years, outstanding of exports madeto countries facing externalization problems may be ignored provided the payments havebeen made by the buyers in the local currency.

C.17 Export Claims

(i) AD Category – I banks may remit export claims on application, provided the relativeexport proceeds have already been realised and repatriated to India and the exporter isnot on the caution list of the Reserve Bank.

(ii) In all such cases of remittances, the exporter should be advised to surrenderproportionate export incentives, if any, received by him.

C.18 Change of buyer/consignee

Prior approval of the Reserve Bank is not required if, after goods have been shipped, theyare to be transferred to a buyer other than the original buyer in the event of default by thelatter, provided the reduction in value, if any, involved does not exceed 25 per cent of theinvoice value and the realization of export proceeds is not delayed beyond the period of12 months from the date of export.

C.19 Extension of Time

(i) The Reserve Bank of India has permitted the AD Category – I banks to extend theperiod of realization of export proceeds beyond 12 months from the date of export, up to aperiod of six months, at a time, irrespective of the invoice value of the export subject to thefollowing conditions:

(a) The export transactions covered by the invoices are not under investigation byDirectorate of Enforcement / Central Bureau of Investigation or other investigatingagencies,

(b) The AD Category – I bank is satisfied that the exporter has not been able to realiseexport proceeds for reasons beyond his control,

(c) The exporter submits a declaration that the export proceeds will be realised during theextended period,

(d) While considering extension beyond one year from the date of export, the totaloutstanding of the exporter does not exceed USD one million or 10 per cent of theaverage export realizations during the preceding three financial years, whichever ishigher.

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(e) All the export bills outstanding beyond six months from the date of export may bereported in XOS statement. However, where extension of time has been granted by theAD Category – I banks, the date up to which extension has been granted may beindicated in the ‘Remarks’ column.

(f) In cases where the exporter has filed suits abroad against the buyer, extension may begranted irrespective of the amount involved / outstanding.

(ii) In cases where an exporter has not been able to realise proceeds of a shipment madewithin the extended period for reasons beyond his control, but expects to be able torealise proceeds if further extension of the period is allowed to him, as well as in respectof cases not covered under Para (i) above necessary application (in duplicate) should bemade to the Regional Office concerned of the Reserve Bank in form ETX through his ADCategory – I bank with appropriate documentary evidence.

C.20 Write off of export bills

(i) An exporter who has not been able to realise the outstanding export dues despite bestefforts, may either self-write off or approach the AD Category – I banks, who had handledthe relevant shipping documents, with appropriate supporting documentary evidence witha request for write off of the unrealised portion subject to the fulfilment of stipulationsregarding surrender of incentives prior to ”write-off” adduced in the A.P. (DIR Series)Circular No. 03 dated 22 July 2010. After liberalizing and simplifying the procedure, thelimits prescribed for “write-offs” of unrealized export bills are as under:

Self “write-off” by an exporter(Other than Status Holder Exporter) 5%*

Self “write-off” by Status Holder Exporters 10%*

‘Write-off” by Authorized Dealer Bank- 10%*

*of the total export proceeds realized during the previous calendar year.

(ii) The above limits will be related to total export proceeds realized during the previouscalendar year and will be cumulatively available in a year.

(iii) The above “write-off” will be subject to conditions that the relevant amount hasremained outstanding for more than one year, satisfactory documentary evidence isfurnished in support of the exporter having made all efforts to realize the dues, and thecase falls under any of the undernoted categories :

(a) The overseas buyer has been declared insolvent and a certificate from the officialliquidator indicating that there is no possibility of recovery of export proceeds has beenproduced.

(b) The overseas buyer is not traceable over a reasonably long period of time.

(c) The goods exported have been auctioned or destroyed by the Port / Customs / Healthauthorities in the importing country.

(d) The unrealized amount represents the balance due in a case settled through theintervention of the Indian Embassy, Foreign Chamber of Commerce or similarOrganization;

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(e) The unrealized amount represents the undrawn balance of an export bill (notexceeding 10% of the invoice value) remaining outstanding and turned out to beunrealizable despite all efforts made by the exporter;

(f) The cost of resorting to legal action would be disproportionate to the unrealized amountof the export bill or where the exporter even after winning the Court case against theoverseas buyer could not execute the Court decree due to reasons beyond his control;

(g) Bills were drawn for the difference between the letter of credit value and actual exportvalue or between the provisional and the actual freight charges but the amounts haveremained unrealized consequent on dishonour of the bills by the overseas buyer andthere are no prospects of realization.

(iv) The exporter has surrendered proportionate export incentives (for the cases notcovered under A. P. (DIR. Series) Circular No.03 dated July 22, 2010), if any, availed of inrespect of the relative shipments. The AD Category – I banks should obtain documentsevidencing surrender of export incentives availed of before permitting the relevant bills tobe written off.

(v) In case of self-write-off, the exporter should submit to the concerned AD bank, aChartered Accountant’s certificate, indicating the export realization in the precedingcalendar year and also the amount of write-off already availed of during the year, if any,the relevant EDF/SDF Nos. to be written off, Bill No., invoice value, commodity exported,country of export. The CA certificate may also indicate that the export benefits, if any,availed of by the exporter have been surrendered.

(vi) However, the following would not qualify for the “write off” facility :

(a) Exports made to countries with externalization problem i.e. where the overseas buyerhas deposited the value of export in local currency but the amount has not been allowedto be repatriated by the central banking authorities of the country.

(b) EDF/SDF forms which are under investigation by agencies like, EnforcementDirectorate, Directorate of Revenue Intelligence, Central Bureau of Investigation, etc. asalso the outstanding bills which are subject matter of civil / criminal suit.

vii) The respective AD banks may forward a statement in form EBW, in the enclosedformat, to the Regional Office of Reserve Bank under whose jurisdiction they arefunctioning, indicating details of write-offs allowed under this circular.

viii) AD banks are advised to put in place a system under which their internal inspectors orauditors (including external auditors appointed by authorised dealers) should carry outrandom sample check / percentage check of “write-off” outstanding export bills.

ix) Cases not covered by the above instructions / beyond the above limits, may bereferred to the concerned Regional Office of Reserve Bank of India.

C.21 Write off in cases of Payment of Claims by ECGC and private insurancecompanies regulated by Insurance Regulatory and Development Authority (IRDA)

(i) AD Category – I banks shall, on an application received from the exporter supported bydocumentary evidence from the ECGC and private insurance companies regulated by

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IRDA confirming that the claim in respect of the outstanding bills has been settled bythem, write off the relative export bills and delete them from the XOS statement.

(ii) Such write-off will not be restricted to the limit of 10 per cent indicated above.

(iii) Surrender of incentives, if any, in such cases will be as provided in the Foreign TradePolicy.

(iv) The claims settled in rupees by ECGC and private insurance companies regulated byIRDA should not be construed as export realization in foreign exchange.

C.22 Write-off – Relaxation

As announced in the Foreign Trade Policy (FTP), 2009-14, with effect from August 27,2009, realisation of export proceeds shall not be insisted upon under any of the ExportPromotion Schemes under the said FTP, subject to the following conditions:

(a) The write off on the basis of merits is allowed by the Reserve Bank or by AD Category– I bank on behalf of the Reserve Bank, as per extant guidelines;

(b) The exporter produces a certificate from the Foreign Mission of India concerned, aboutthe fact of non-recovery of export proceeds from the buyer; and

( c) This would not be applicable in self write off cases.

(d) The AD Category – I banks are advised not to insist on the surrender of proportionateexport incentives, other than under the Duty Drawback Scheme, if availed of, by theexporter under any of the Export Promotion Schemes under FTP 2009-14 , subject tofulfilment of conditions as stated above. The drawback amount has to be recovered evenif the claim is settled by the Export Credit Guarantee Corporation of India Limited (ECGC)or the write –off is allowed by the Reserve Bank.

C.23 Shipments Lost in Transit

(i) When shipments from India for which payment has not been received either bynegotiation of bills under letters of credit or otherwise are lost in transit, the AD Category –I banks must ensure that insurance claim is made as soon as the loss is known.

(ii) In cases where the claim is payable abroad, the AD Category - banks must arrange tocollect the full amount of claim due on the lost shipment, through the medium of theiroverseas branch/correspondent and release the duplicate copy of EDF/SDF form onlyafter the amount has been collected.

(iii) A certificate for the amount of claim received should be furnished on the reverse of theduplicate copy.

(iv) AD Category – I banks should ensure that amounts of claims on shipments lost intransit which are partially settled directly by shipping companies/airlines under carrier’sliability abroad are also repatriated to India by exporters.

C.24 ‘Netting off’ of export receivables against import payments – Units in SpecialEconomic Zones (SEZs)

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AD Category - I banks may allow requests received from exporters for ‘netting off’ ofexport receivables against import payments for units located in Special Economic Zonessubject to the following:

(i) The ‘netting off’ of export receivables against import payments is in respect of the sameIndian entity and the overseas buyer / supplier (bilateral netting) and the netting may bedone as on the date of balance sheet of the unit in SEZ.

(ii) The details of export of goods are documented in EDF/SDF (O) forms / DTR as thecase may be while details of import of goods / services are recorded through A1 / A2 formas the case may be. The relative EDF/SDF forms will be treated as complete by thedesignated AD Category – I banks only after the entire proceeds are adjusted / received.

(iii) Both the transactions of sale and purchase in ‘R’ - Returns under FET-ERS arereported separately.

(iv) The export / import transactions with ACU countries are kept outside the arrangement.

(v) All the relevant documents are submitted to the concerned AD Category – I banks whoshould comply with all the regulatory requirements relating to the transactions.

C.25 – Set-off of export receivables against import payables: (effective fromNovember 17, 2011).

AD category –I banks may deal with the cases of set-off of export receivables againstimport payables, subject to following terms and conditions:

(i) The import is as per the Foreign Trade Policy in force.

(ii) Invoices/Bills of Lading/Airway Bills and Exchange Control copies of Bills of Entry forhome consumption have been submitted by the importer to the Authorized Dealer bank.

(iii) Payment for the import is still outstanding in the books of the importer.

(iv) Both the transactions of sale and purchase may be reported separately in ‘R’ Returns.

(v) The relative EDF/SDF forms will be released by the AD bank only after the entireexport proceeds are adjusted / received.

(vi) The ” set-off” of export receivables against import payments should be in respect ofthe same overseas buyer and supplier and that consent for ”set-off” has been obtainedfrom him.

(vii) The export / import transactions with ACU countries should be kept outside thearrangement.

(viii) All the relevant documents are submitted to the concerned AD bank who shouldcomply with all the regulatory requirements relating to the transactions.

C.26 Agency Commission on Exports

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(i) AD Category – I banks may allow payment of commission, either by remittance or bydeduction from invoice value, on application submitted by the exporter. The remittance onagency commission may be allowed subject to conditions as under:

(a) Amount of commission has been declared on EDF/SDF/SOFTEX form and acceptedby the Customs authorities or Ministry of Information Technology, Government of India /EPZ authorities as the case may be. In cases where the commission has not beendeclared on EDF/SDF/SOFTEX form, remittance may be allowed after satisfying thereasons adduced by the exporter for not declaring commission on Export DeclarationForm, provided a valid agreement/written understanding between the exporters and/orbeneficiary for payment of commission exists.

(b) The relative shipment has already been made.

(ii) AD Category – I banks may allow payment of commission by Indian exporters, inrespect of their exports covered under counter trade arrangement through EscrowAccounts designated in US Dollar, subject to the following conditions:

(a) The payment of commission satisfies the conditions as at (a) and (b) stipulated inparagraph (i) above.

(b) The commission is not payable to Escrow Account holders themselves.

(c) The commission should not be allowed by deduction from the invoice value.

(iii) Payment of commission is prohibited on exports made by Indian Partners towardsequity participation in an overseas joint venture / wholly owned subsidiary as also exportsunder Rupee Credit Route except commission up to 10 per cent of invoice value ofexports of tea & tobacco.

C.27 Refund of Export Proceeds

AD Category – I banks, through whom the export proceeds were originally realised mayconsider requests for refund of export proceeds of goods exported from India and beingre-imported into India on account of poor quality. While permitting such transactions, ADCategory – I banks are required to :

(i) Exercise due diligence regarding the track record of the exporter

(ii) Verify the bona-fides of the transactions

(iii) Obtain from the exporter a certificate issued by DGFT / Custom authorities that noincentives have been availed by the exporter against the relevant export or theproportionate incentives availed, if any, for the relevant export have been surrendered

(iv) Obtain an undertaking from the exporter that the goods will be re-imported within threemonths from the date of remittance and

(v) Ensure that all procedures as applicable to normal imports are adhered to.

C.28 Exporters’ Caution List

(i) AD Category – I banks will also be advised whenever exporters are cautioned in termsof provisions contained in Regulation 17 of “Export Regulations” (Annex 2). They may

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approve EDF/SDF forms of exporters who have been placed on caution list if theexporters concerned produce evidence of having received an advance payment or anirrevocable letter of credit in their favour covering the full value of the proposed exports.

(ii) Such approval may be given even in cases where usance bills are to be drawn for theshipment provided the relative letter of credit covers the full export value and also permitssuch drawings and the usance bill mature within twelve months from the date of shipment.

(iii) AD Category – I banks should obtain prior approval of the Reserve Bank for issuingguarantees for caution-listed exporters.

--------------------------------------------------------------------------------

Annex – 1 - Foreign Exchange Management (Current Account Transactions) Rules,2000

Annex-2 - Form EFC

Annex 3- Common SOFTEX Form

Annex-4- Revised SOFTEX Procedure

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Appendix

List of Circulars which have been consolidated in theMaster Circular on Export of Goods and Services

Sr.No

Circular No. Subject Date

1 A.D. (MA Series) Circular No.15 May 31, 19932 A.P. (DIR Series) Circular No.12 September 9, 2000

3 A.P. (DIR Series) Circular No.4Counter-Trade Arrangements withTRADE Romania August 27, 2001

4 A.P. (DIR Series) Circular No.5 Export of Goods and Services August 27, 2001

5 A.P. (DIR Series) Circular No.6Export of Goods and Services September 24,

2001

6 A.P. (DIR Series) Circular No.9Export of Goods and Services -Certification of SOFTEX Forms October 25, 2001

7 A.P. (DIR Series) Circular No.10Asian Clearing Union (ACU)Mechanism – Exports to Nepal November 1, 2001

8 A.P. (DIR Series) Circular No.20 Export of goods & services –Extension of period of realisation January 28, 2002

9 A.P. (DIR Series) Circular No.30Export of Goods for Exhibition /Trade Fairs outside India March 26, 2002

10 A.P. (DIR Series) Circular No.34Facilities to Status Holder Exporters--Credit to the EEFC account April 1, 2002

11 A.P. (DIR Series) Circular No.35

Export of Goods and Services -Facilities to Status Holder Exporters April 1, 2002

Foreign Exchange Management Act,1999 –

12 A.P. (DIR Series) Circular No.38Export of goods and services –Reduction in value

April 12, 2002

Use of Credit Cards

13 A.P. (DIR Series) Circular No.53AP (DIR Series) Circular No.53(June 27, 2002)

June 27, 2002

Maintenance of foreign currencyaccount abroad by a company/firm/abody corporate

14 A.P. (DIR Series) Circular No.54 registered or incorporated in India

June 29, 2002

15 A.P. (DIR Series) Circular No.2 Export of Goods and Services July 4, 2002Export of Goods and Services –

16A.P. (DIR Series) CircularNo.10)

Facilities to units in SpecialEconomic Zones (SEZs

August 14, 2002

Exchange Earners’ Foreign Currency(EEFC)

17 A.P. (DIR Series) Circular No.11 Account Scheme – AmendmentAugust 14, 2002

18 A.P. (DIR Series) Circular No.12 Export of Goods and Services August 28, 2002

19 A.P. (DIR Series) Circular No.21Disposal of duplicate copies ofExport Declaration Forms

September 16,2002

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20A.P. (DIR Series) CircularNo.28)

Opening, holding and maintainingForeign Currency Account in India byUnit in Special Economic Zones(SEZs

October 3, 2002

21 A.P. (DIR Series) Circular No.33 Export of Goods and Services October 23, 2002

22 A.P. (DIR Series) Circular No.34Exchange Earners' Foreign Currency(EEFC) Account Scheme October 31, 2002

Issue of Corporate Guarantee23 A.P. (DIR Series) Circular No.41 in lieu of Bid Bond Guarantee November 8, 2002

24 A.P. (DIR Series) Circular No.61"Write-off" of unrealised export bills-Surrender of export incentives December 14, 2002

25 A.P. (DIR Series) Circular No.62Exchange Earners' Foreign Currency(EEFC) Account Scheme December 17, 2002

26 A.P. (DIR Series) Circular No.78Exchange Earners’ Foreign Currency(EEFC) Account Scheme February 14, 2003

27 A.P. (DIR Series) Circular No.91

Export of Goods and Services -Facilities to Units in SpecialEconomic Zones (SEZs)

April 1, 2003

28 A.P. (DIR Series) Circular No.94

Export of Goods and Services -Export of goods on promotionalgrounds

April 26, 2003

29A.P. (DIR Series) CircularNo.100

Export of Goods and Services -Exports to Warehouses Abroad May 2, 2003

30A.P. (DIR Series) CircularNo.104

Foreign Exchange Management Act,1999 – Liberalisation May 31, 2003

Supply of goods by SpecialEconomic Zones (SEZs) to Units in

31A.P. (DIR Series) CircularNo.105

Domestic Tariff Area (DTA) againstpayment in foreign exchange

June 16, 2003

32 A.P. (DIR Series) Circular No.8Foreign Exchange Management Act,1999 August 16, 2003

33 A.P. (DIR Series) Circular No.12 Export of Goods and Services August 20, 2003Opening of Foreign CurrencyAccount in India by Project /

34 A.P. (DIR Series) Circular No.20Service Exporter for Execution ofContract Abroad

September 23,2003

35 A.P. (DIR Series) Circular No.22Export of Goods and Services -Payment of Claims by ECGC

September 24,2003

36 A.P. (DIR Series) Circular No.26

Export of Goods and Services -Export of Books on ConsignmentBasis

October 3, 2003

37 A.P. (DIR Series) Circular No.30 Export of Goods and Services October 21, 2003

38 A.P. (DIR Series) Circular No.32Export of Goods and Services -Project Exports October 28, 2003

39 A.P. (DIR Series) Circular No.40Export of Goods and Services –Liberalisation December 5, 2003

40 A.P. (DIR Series) Circular No.61Exemption from Declaration ofExport of Goods and Software - January 31, 2004

41 A.P. (DIR Series) Circular No.68Export of Goods and Services –Liberalisation February 11, 2004

42 A.P. (DIR Series) Circular No.73Export of Goods by way of Gifts -Liberalisation - February 20, 2004

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43 A.P. (DIR Series) Circular No.94

Exchange Earners' Foreign Currency(EEFC) Account Scheme – TradeRelated Loans/Advances

June 7, 2004

44 A.P. (DIR Series) Circular No.96

Exchange Earner's Foreign Currency(EEFC) Account Scheme -Liberalisation -

June 15, 2004

45 A.P. (DIR Series) Circular No.97Foreign Exchange Management Act,1999 - June 21, 2004

46 A.P. (DIR Series) Circular No.9Foreign Exchange Management Act,1999 September 1, 2004

47 A.P. (DIR Series) Circular No.10Export of Goods and Services toLatin American Countries

September 13,2004

48 A.P. (DIR Series) Circular No.25Period of Realisation for 100% EOUsExtended to One Year November 1, 2004

49 A,P. (DIR Series) Circular No.21

Export of Goods and Services -Liberalisation - GR Approval forexport

January 10, 2006

50 A.P. (DIR Series) Circular No.31Export of Goods and Services –Extension of period of realization April 21, 2006

51 A.P. (DIR Series) Circular No.32

Remittance of initial and recurringexpenses for Branch offices openedabroad

April 21, 2006

52 A.P. (DIR Series) Circular No.15

Exchange Earner's Foreign Currency(EEFC) Account-Liberalisation ofProcedure

November 30, 2006

53 A.P. (DIR Series) Circular No.18 Establishment of Offices Abroad December 4, 2006

54 A.P. (DIR Series) Circular No.26Liberalisations in Project and ServiceExports January 8, 2007

55 A.P. (DIR Series) Circular No.33Liberalisation of Export and Importprocedures February 28, 2007

56 A.P. (DIR Series) Circular No.37

Export of Goods and ServicesRefund of Export Proceeds -Liberalisation

April 5, 2007

57 A.P. (DIR Series) Circular No.13Exchange Earner's Foreign Currency(EEFC) Account- Liberalisation October 6, 2007

58 A.P. (DIR Series) Circular No.49

Export of Goods and Services -Payments of Claims by InsuranceCompanies-Write off

June 3, 2008

59 A.P. (DIR Series) Circular No.50

Export of Goods and Services-Realisation and Repatriation ofExport Proceeds-Liberalisation

June 3, 2008

60 A.P (DIR Series) Circular No.4Exchange Earner's Foreign Currency(EEFC) Account August 4, 2008

61 A.P (DIR Series) Circular No.6

Export of Goods and Services- DirectDispatch of Shipping DocumentsRealisation and Repatriation ofExport Proceeds – Liberalisation

August 13, 2008

62 A.P (DIR Series) Circular No.43Settlement system under ACUMechanism December 26, 2008

63 A.P (DIR Series) Circular No.51Opening of Diamond Dollar Accounts– Liberalisation February 13, 2009

64 A.P. (DIR Series) Circular No.60 On-line downloading of GR Forms March 26, 2009

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65 A.P. (DIR Series) Circular No.70

Export of Goods and Software –Realisation and Repatriation ofexport Proceeds - Liberalisation

June 30, 2009

66 A.P (DIR Series) Circular No.13Opening of Diamond Dollar Accounts(DDAs) - Modification October 29, 2009

67 A.P. (DIR Series) Circular No.14Maldives Monetary Authority nowACU Member October 30, 2009

68 A.P. (DIR Series) Circular No.03

Export of Goods and Services -Unrealised export bills – Write-off -Surrender of export incentives

July 22, 2010

69 A.P. (DIR Series) Circular No.17

Processing and Settlement of Exportrelated receipts facilitated by OnlinePayment Gateways

November 16, 2010

70 A.P. (DIR Series) Circular No.30ACU Mechanism – Payments forimport of Oil or Gas December 23, 2010

71 A.P. (DIR Series) Circular No.31 ACU Mechanism – Indo-Iran Trade December 27, 2010

72 A.P. (DIR Series) Circular No.47

Export of Goods and Software –Realisation and Repatriation ofexport proceeds – Liberalisation

March 31, 2011

73 A.P. (DIR Series) Circular No.15

Exchange Earners Foreign Currency(EEFC) Account and ResidentForeign Currency (RFC) account –Joint holder - liberalisation

September 15,2011

74 A.P. (DIR Series) Circular No.35

Processing and Settlement of Exportrelated receipts facilitated by OnlinePayment Gateways - Enhancementof the value of transaction

October 14, 2011

75 A.P. (DIR Series) Circular No.40

Export of Goods and Software –Realisation and Repatriation ofexport proceeds – Liberalisation

November 01, 2011

76 A.P. (DIR Series) Circular No.47

“Set-off” of export receivablesagainst import payables -Liberalization of Procedure

November 17, 2011

77 A.P. (DIR Series) Circular No.48Mid – Sea Trans-shipment of catchby Deep Sea Fishing Vessel November 21, 2011

78 A.P. (DIR Series) Circular No.65Export of Goods and Services -Forwarder’s Cargo Receipt January 12, 2012

79 A.P. (DIR Series) Circular No.73Opening of Diamond Dollar Accounts(DDAs January 31, 2012

80 A.P. (DIR Series) Circular No.80

Export of Goods and Services-Simplification and Revision of SoftexProcedure

February 15, 2012

81 A.P. (DIR Series) Circular No.81

Export of Goods and Services -Receipt of advance payment forexport of goods Involving shipment(manufacture and ship) beyond oneyear

February 21, 2012

82 A.P. (DIR Series) Circular No.92

Opening of Diamond Dollar Accounts(DDAs) – Change in periodicity of thereporting

March 13, 2012

83A.P. (DIR Series) CircularNo.124

Exchange Earner's Foreign Currency(EEFC) Account May 10, 2012

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84A.P. (DIR Series) CircularNo.128

Exchange Earner’s Foreign CurrencyAccount May 16, 2012

85 A.P. (DIR Series) Circular No.08Exchange Earner's Foreign CurrencyAccount July 18, 2012

86 A.P. (DIR Series) Circular No.12

EEFC Account, Diamond DollarAccount and Resident ForeignCurrency Account - Review ofGuidelines

July 31, 2012

87 A.P. (DIR Series) Circular No.46

Supply of Goods and Services bySpecial Economic Zones to Units inDomestic Tariff Areas

October 23, 2012

88 A.P. (DIR Series) Circular No.47

Export of Goods and Services –Simplification and Revision of SoftexProcedure

October 23, 2012

89 A.P. (DIR Series) Circular No.52

Export of Goods and Software –Realisation and Repatriation ofexport proceeds – Liberalisation

November 20, 2012

90 A.P. (DIR Series) Circular No.66

Export of Goods and Services –Simplification and Revision of SoftexProcedure at SEZs

January 01, 2013

91 A.P. (DIR Series) Circular No.79

Exchange Earner's Foreign CurrencyAccount, Diamond Dollar Account &Resident Foreign Currency DomesticAccount

January 22, 2013

92 A.P. (DIR Series) Circular No.88

“Write-off” of unrealized export bills –Export of Goods and Services –Simplification of procedure

March 12, 2013

93A.P. (DIR Series) CircularNo.105

Export of Goods and Software –Realisation and Repatriation ofexport proceeds – Liberalisation

May 20, 2013

94A.P. (DIR Series) CircularNo.108

Export of Goods and Services -Realization and Repatriation periodfor units in Special Economic Zones(SEZ)

June 13, 2013

95A.P. (DIR Series) CircularNo.109

Processing and Settlement of Exportrelated receipts facilitated by OnlinePayment Gateways – Enhancementof the value of transaction

June 13, 2013

96

A.P. (DIR Series) Circular No.14 Export of Goods and Software –Realisation and Repatriation ofexport proceeds – Liberalisation

July 22, 2013

97

A.P. (DIR Series) Circular No.43 Export of Goods and Services -Simplification and Revision ofDeclaration Form for Exports ofGoods/Software

September 13,2013

98A.P. (DIR Series) Circular No.60 Export Outstanding Statement (XOS)

Online Bank wide Submission October 01, 2013

99A.P. (DIR Series) Circular No.70 Third party payments for export /

import transactions November 08, 2013

100A.P. (DIR Series) Circular No.100 Third party payments for export /

import transactions February 4, 2014

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101

A.P. (DIR Series) Circular No.101 Export of Goods and Services:Export Data Processing andMonitoring System (EDPMS)

February 4, 2014

102

A.P. (DIR Series) Circular No. 109 Export of Goods and Services:Export Data Processing andMonitoring System (EDPMS)

February 28, 2014

103A.P. (DIR Series) Circular No.132 Export of Goods - Long Term Export

Advances May 21, 2014

104

A.P.(DIR Series) Circular No.146 Export & Import of Currencies:Enhanced facilities for residents andnon-residents

June 19, 2014

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